Poor Rep. John Fleming. After he pays his 500 employees and rent for his Subway and UPS stores, he says he only has $400,000 to show for it. Only $400,000. That poor guy. It's a wonder he can manage.
Here's a bit of his whine:
"In my own case, I own LLCs," Fleming told MSNBC's Chris Jansing. "The income flows to my personal tax return and whatever is left over after taxes are paid, I feed my family on the one hand and on the other hand, I reinvest in my business."
"With all due respect, The Wall Street Journal estimated that your businesses, which I believe are Subway sandwich shops and UPS stores -- very successful -- brought you last year, over $6 million," Jansing noted.
"Yeah, that's before you pay 500 employees, you pay rent, you pay equipment and food," Fleming agreed. "Since my net income -- and again, that's the individual rate that I told you about -- the amount that I have to reinvest in my business and feed my family is more like $600,000 of that $6.3 million. And so by the time I feed my family, I have maybe $400,000 left over to invest in new locations, upgrade my locations, buy more equipment."
Wow, there's some magic in those numbers. I'm guessing his reference to "feeding his family" also relates to paying for his home, his cars, their private schools, and any other household expenses, which he estimates at $200,000, five times the earnings of an average middle class family. But that's not even the real magic.
It's unclear where that $6.3 million figure came from. Jansing noted that it "brought him" $6.3 million, but what does that mean? If the $6.3 million is the amount that flowed through onto his personal tax return, then payroll, equipment, rent and supplies were already factored in. That is the amount left over after he expensed all of those items.
If, on the other hand, $600,000 flowed through from his LLC to his personal taxes, then he had $600,000 left to "feed his family with", since all of the expenses he enumerated as counting against it would have been accounted for already. Six-hundred thousand bucks isn't such a bad paycheck to take home, especially when he isn't really active in the day-to-day management of the businesses, just the higher level overview, by his own admission.
Assuming his $174,000 Congressional salary isn't included in the $600,000 figure, that's nearly $800,000 of income. Excuse me if I don't weep for him paying a bit more in taxes, though even with all that combined income, he hasn't hit the million-dollar mark set by President Obama's plan. Except....he has.
By the way, the reason Rep. Fleming has structured his businesses as Limited Liability Companies is to avoid paying any corporate income tax, similar to Koch Industries' structure. Why? Because corporate rates are higher than personal tax rates, and losses can be passed through to offset other losses on their personal tax return.
In fact, a look at Fleming's financial disclosures reveal that he was less than forthcoming about his financial picture. If you're going to go on TV and whine about taxes sucking the life out of job creation, Rep. Fleming, you might want to think about at least drawing the whole picture.
According to his most recent financial disclosures, Rep. Fleming's three largest sources of income are from his Subway restaurants, a medical practice and his property investment corporation. The Subways yielded *income* of over $5,000,000 in 2010. The property investment corporation yielded income of more than $100,000 and less than one million dollars in 2010. The medical practice yielded income of between 1 million and $5 million. He has other businesses, too, but their income reported is negligible in comparison.
If I add up the totals of non-IRA, non-401k, non-investment income on the high and low ends, Rep. Fleming's income is between $6,271,000 and 12,164,500 for 2010. That's substantially more than the paltry $400,000 he claims to have for reinvestment into his businesses, and doesn't even take into account income sources from other passive investment activities.
Rep. Fleming just unwittingly made himself the poster child for tax reform. Between his creative corporate structuring -- all legal, of course -- to minimize his income taxes and his disingenuous claim to only have a fraction of that available for reinvestment in jobs and business while his disclosures clearly say otherwise, he's proven just how much we need tax reform right now.